Economic Strategy and National Security: A Next Generation Approach

regulatory environments, and restructure highly regulated labor
markets and welfare systems. In fact, the Jospin government submitted an expansionary budget for 1999 with a heavy emphasis on
social spending and has proposed reducing the workweek to 35
hours,
90 and the Schröeder government proposed increasing some
taxes on companies and reversing Helmut Kohl's labor market
reforms.

In Asia, Taiwan's entrepreneurial culture and vibrant small company sector have helped the island weather the Asian economic
storm better than most. One of the keys to Taiwan's success is that,
unlike Japan and South Korea, where government ministers identify and fund high-technology initiatives (and shield uncompetitive enterprises), Taiwanese companies have largely made their
own way without government interference. Although Japan would
benefit from emulating Taiwan's entrepreneurial environment, Prime Minister Keizo Obuchi, like his predecessors, appears to
lack the will or ability to reform a regulatory system that puts start-
ups at a disadvantage. China's potential is enormous, particularly
given the entrepreneurial vigor of the Chinese people, but it will be
some time before China's government moves to a market economy
and reverses decades of communist policies that have stunted entrepreneurial activity. In sum, European and Asian governments
will need to remove myriad regulatory impediments to entrepreneurs in order to foster venture capital activity on a par with the United States.

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